Restaurant Owners Use Zapper To Cook the Books 454
Hugh Pickens passes along a NYTimes report on software programs called "zappers," which allow even technologically illiterate restaurant and store owners to siphon cash from computer cash registers to cheat tax officials. In the old days, restaurant owners who wanted to cheat kept two sets of books. But because cash registers make automated records, hiding the theft requires getting into the machine's memory and changing that record. "...the Canadian province of Quebec may be the world leader in prosecuting zapper cases. Since 1997, zappers have figured in more than 230 investigations, according to the tax collecting body Revenu Québec... In making 713 searches of merchants, Revenu Québec found 31 zapper programs that worked on 13 cash register systems. Only two known zapper cases have been prosecuted in the United States... The cash register security industry is focused on protecting patrons and owners from theft by employees, which may be one reason so few zappers are uncovered in the United States. No one hires security experts to protect the government from devious businesses... As hard as zapper software is to detect, it is easy to make, said Jeff Moss, organizer of the annual hacker convention Def Con. 'If it runs on a Windows system and you are a competent Windows administrator, you can do it,' he said."
It's illegal, but is it immoral? (Score:1, Interesting)
Remote systems (Score:3, Interesting)
We use remote systems in our franchise stores (Django-based). Things run in Firefox. Even the touch screen PCs run Firefox full screen mode (and soon to be tablets). Makes deploying new versions a breeze.
My Favorite Way of Stealimg From Myself (Score:5, Interesting)
Many vendors would issue rebate checks in teh business name if you purchased certain quantities of food and supplies. These rebates never appeared on the invoices.
I would substitute the checks for cash in the daily deposit. Everything balanced and essentially undetectable.
I also would void large guest checks as if I was giving a refund and "refund" the cash to my pocket..
I would "comp" meals to complete strangers and pocket the money.
And I always ate well and never reimbursed my business for it.
If I sold inventory to another restaurant, the money went into my pocket.
So nothing to see here. Move along. Plenty of ways to steal without some damn "zapper". The secret is to never be greedy; greedy people get caught.
This is news in the US? Really? (Score:5, Interesting)
In my old country - Brazil - the cash register vendor had, as part of their pitch, the section about how at the end of the day you would flip a switch in the machine and it would invent a whole new day of sales for you up to a specified amount.
I worked on a restaurant that, when closing, would have the manager moving the register to some back room and generating a new day of sales.
This came from the manufacturer. It was not an add-on. And it was easy to do, the manager only had to flip the switch, punch in the amount for the day, and let it rip.
This manufacturer was one big american company that was purchased by a bigger company and then spun off with the same name.
The registers, BTW, were pre-audited by the government team - which clearly wasn't savvy enough to find the switch or had been properly compensated for their blindness.
I'm surprised that anyone is surprised... Though I agree that it is wrong.
Re:Yeah, and we should be surprised of this becaus (Score:5, Interesting)
It's not that small business owners are natural crooks. They're just doing what they have to do to survive. If every small business owner paid all his taxes, the tax rate would be low. But if you cheat, and skim part of your income, the chances of being caught are practically zero as long as you're halfway careful. So of course, lots of people cheat, which gives them an advantage over their honest competition.
Consequently, the government raises its tax rates to compensate for the reduced revenue because of the cheaters. This puts the honest businesspeople at an even greater disadvantage. They have to start cheating, too, or they'd go out of business. So now we arrive at the present-day situation where every small business owner cheats, the tax rates are ridiculously high, and everyone plays a guessing game trying to figure out the minimum amount of revenue they can get away with reporting to the government.
It's certainly not a desirable situation, but that's how the game has to be played if you want to stay in business. I suspect the amount of revenue collected is roughly equivalent to what would be collected with lower tax rates and a completely honest citizenry. So the net effect is about the same to the government, but the game is fixed from the start.
Re:I've had requests to do this (Score:2, Interesting)
Well I do care. I pay the retailer the sales tax and he pockets it. He's not only cheating the government; he's scamming me.
I always have my suspicions about a dealer at a flea market, convention, etc. who charges sales tax when none of the others do (because they know they can get away with it for a temporary occasion). I usually assume that dealer is greedier than the others.
Of course, I often think the worst (and am often proved right).
Re:Yeah, and we should be surprised of this becaus (Score:5, Interesting)
"Study economics and current events, particularly Zimbabwe"
fixed that for you, weimar germany only printed massive amounts of money to repay war repartitions. modern Zimbabwe is printing massive amounts of 100 billion dollar bills to fund and supply their army which is in a protracted civil war with 2 large militia groups as a result of the African war in the Congo.
what happened in germany is minor compared to what Zimbabwe is doing, which is printing money, buying foreign currency and funding their entire army with foreign currencies. that would be like america going out printing 300 trillion dollars, buying euros, yen, etc from banks around the world and then 'using' that foreign non hyper inflated currency to repay the national debt. (yes i realize the national debt is only 9.65 trillion, but to get enough foreign currencies from foreign banks, at least 300 trillion us dollars would have to be printed, if not a few hundred quadrillion, it would be hard to sucker over banks, after the first few large cash transfers they'd start devaluing the dollar in proportion to the reported sizes of unexpected cash purchases)
eventually, if national debt out strips the pace at which our economy grows, the government is going to start using kooky plans to raise the available funds, however, it's pretty clear that we're in no immediate threat of the government pulling any tricks to try and repay debt. a couple lean decades of economic a serious recession, and continued tax cut and spend politics, and America might be in serious trouble finding enough people to buy their debt. for right now though, things aren't critical. although i find the amount of debt, and deficit growth sickening.
Purchases (Score:5, Interesting)
And since purchases must go through only the very small handful of licensed distributors, there's no hiding it.
And as for the people who are saying "If you don't skim you can't stay in business," well, maybe you're right. I went broke.
Tamper-Proof Cash Registers (Score:3, Interesting)
Warren Buffet pay 25%, his gardener pays 35% (Score:3, Interesting)
Since the first term of Ronald Reagan, the rich and super-rich have used the Republican party and the religious right to constantly lower their tax rate. Now they pay a significantly less percentage than working people. And that is before all the specialized tax breaks hidden in the 1000-page appropriations bills that no congressman ever reads.
This is never going to change, regardless of who wins what election.
The only way that ordinary people are going to get tax fairness, i.e. the same rates as the super-rich, is to cut corners, zap the books, write in extra kids on their W-2 forms, Yes, to cheat. Have you ever known anyone besides a few limousine-liberals who feel good about paying taxes? Fifty years ago, it was common in the USA.
Not anymore. People realize that they need their money to pay for the things that government used to provide with all the taxes that they take right out of your check. And they're discovering new and creative ways to do protect their money from those who would just give it to Haliburton's permanent endless gravy train.
As the technological elite it would be in our best interest to 'look the other way' when we increasingly find people using technical means to protect their incomes that they need to support their families. If we rat them out, they will hate us. And Haliburton is not going to protect us from their wrath.
On the other hand, if we discover people that are withholding huge sums from the public knowledge, we should use our technical abilities to force them to contribute a reasonable percentage to the public good. These would be people like international drug dealers and other criminals who pay nothing in taxes, either legal taxes or contributions to community charities.
As in so many areas, as the government collapses into insanity or irrelevancy, the burden falls to the us, the technological elite, to decide and enforce the proper balances for the allocation of social resources.
We must do what we can, because we are the only ones with the can-do. This mentality seems weird in 2008, but it will be standard operating procedure in 2028, which is not that far away for most of us.
Thank you,... and be a mensch, stop modding me down to -1, just because you don't like what I say.
Windows in the supermarket (Score:5, Interesting)
Here in Portland, Oregon, one of the major grocery store chains (Fred Meyer, Inc.) has an automated check-out line that has each station running on Windows. I don't know which version but I suspect that it is Win2000. Each station has a laser bar-code scanner for most items. After scanning the item, the user places it in a bag that is on a scale. The weight of each individual grocery item is in the store's data base. When the weight on the scale matches the bar-code, the system prompts the user to scan the next item. There is a touch screen for entering the type of produce by pre-assigned number. For payment there is a credit/debit card reader, a paper-currency scanner, and a coin-weighing unit.
There is a stand-alone PC running Windows for each station and they are connected to a store LAN. Embedded systems like this running Windows on standard PCs is very common. It's easy to develop for this platform. And when it crashes, and it does more than the robust real-time operating systems used on 32-bit microcontroller embedded designs, then the attendant simply opens the cabinet and reboots the PC.
The automatic bottle return machines that read the bar-codes on empties all use Windows. They are constantly crashing.
You don't find Windows running nuclear powerplants, wafer fabs, international bank transfers, or jet airliners. But you find it nearly everywhere else in embedded-systems. Grocery stores find that it's cheaper to throw together a hack job in Visual BASIC and then run it on a few $250 PCs with $50 Windows licenses than it is to pay a programmer $25/hr to write robust code that runs on $8 microcontrollers.
I'm a microcontroller-systems designer and I run into this situation all the time.
Re:Public goods (Score:5, Interesting)
This is a bizarre argument (which gives me nostalgic memories of my college freshman all-night bull sessions). But it's important because it gets to the heart of the social contract that we (almost) all agree to, which we recently understand much better because of studies in the evolution of cooperation and in economic experiments in cooperation, like Prisoner's Dilemma. (I recently read a few good articles by Samuel Bowles http://en.wikipedia.org/wiki/Samuel_Bowles_(economist) [wikipedia.org] which is why I'm so interested.
If taxes were voluntary, they wouldn't be taxes.
If contributions were voluntary, then freeloaders wouldn't contribute, and would benefit from the contributions of those who do. Cooperation would collapse, and we wouldn't have the advantages of cooperation. We wouldn't have roads, or electricity, or water, or cities.
I know you believe that they could all be produced by entrepreneurs, but if you look at the history of industrialization, you'd see that governments play a major role. Try to find a country with electricity that wasn't promoted by the government or the colonial power.
In fact, try to find a country run by free-market libertarian principles. Afghanistan is the closest I can think of right now, but their GNP is nothing to brag about.
That's because you're a selfish freeloader. That's why we need tax laws that are enforced.
I see no moral problem with robbing from the rich to give to the poor. I think we'd have a more productive economy if we did (look at Finland).
In fact, I see no moral problem with robbing from the rich to give to me.
Legalised Terorism (Score:2, Interesting)
Here in Quebec, we have two revenue agencies. Revenu Quebec and Revenu Canada. Talk about redundant work...
They both operate with basically the same texts of laws but somehow, the Quebec agency manages to interpret its texts differently than the same texts in Canada and completely ignores jurisprudence cases stating the contrary.
They are mean terrorists. I run my businesses clean but not because of them; I do it for myself to sleep well at night. I would love to get some of my money back but I'm to darn honest to do it.
As Canada is lowering its tax rate; from 7% to 5% in a few years, Quebec is considering raising its 7.7% tax rate because it is compounded on top of the Canadian rate and they feel they're loosing money when Canada is lowering its tax rate. Idiots...
Several years ago I was young and like most youth of my time; I was a separatist wanting Quebec to become a sovereign Country. Needless to say as I grew older, I realized that without revenue Canada I would be stuck with those morons from revenue Quebec as my only revenue agency. They would be free to terrorize me and my family as they wanted. I switched sides and I've been a Canadian since!
Don't need two sets of books (Score:3, Interesting)
Re:Physical access = carte blanche (Score:3, Interesting)
Well, that's not how the sales tax system works in Canada. Especially in Quebec, where the "Harmonised Sales Tax" (HST) combines the federal government's GST (which the Conservative government dropped from 7% to 5% - yay!) with the Quebec PST. Companies are allowed to deduct all the HST they pay on any inputs (there are a few small exceptions), collect the HST on everything they sell, and remit the difference. So, using simple numbers, a restaurant pays $1,000 per day for staff, food, soap, linen, etc., on which they pay 12% HST ($1,120 total). They collect $2,000 + HST for the meals they sell ($240 HST). So, they should be remitting $120/day. And note, this is not a cost to them; they were able to deduct all the HST they paid, and only remit the difference between what they collected from their customers and what they paid to their suppliers.
Now, these restaurants ARE charging the HST to their customers, but they're not paying it to the government, they're keeping it for themselves. If I were a taxpayer in Quebec, I'd be mighty pissed off if a 3rd party was ostensibly collecting tax money from me on behalf of the gov't, and then keeping it, especially if the gov't later came back and said it had to raise income taxes because HST revenue was less than expected.
So in this case, it's not just a fraud against the government; it's a fraud against the customer as well. As much as I dislike paying taxes, I dislike it even more when I think I'm paying taxes and it's going into a thief's pocket.
Re:Physical access = carte blanche (Score:4, Interesting)
You don't even need a TPM to prevent this. Only the ability to securely destroy keys will suffice to prevent changing the books afterwards.
Every, oh, say 15 minutes you generate a new public-private keypair. You add a log message to the last 15 minutes of log containing the newly generated public key, then sign those last 15 minutes using the previous private key, after which you thorougly erase it from memory.
Any alterations to the logfile will have to break the chain of keys. If in addition to this security, the public key is transmitted to a trusted third party every 15 minutes, including the hash of the previous data block (e.g. the bank that processes credit card payments), it will be utterly impossible to change logfiles after the fact.
So you'd have to actually keep 2 sets of books on 2 separate cash registers, and you'd have no ability to use electronic payment methods for the "cooked" part of the books. Of course these limitations make that this isn't 100% secure either, but it's as secure as any TPM is going to make it.
Btw if you'd intercept a single private key, that would not help you cook the books afterward. You'd have to do it before any hash or public key is transmitted to the third party.
Comment removed (Score:3, Interesting)
Re:Warren Buffet pay 25%, his gardener pays 35% (Score:3, Interesting)
Most sensible countries (i.e.: any "western" country apart from the US) have tiered minimum wages.
Germany (the "western" country with second most inhabitants after the US) has no minimum wage at all, and never had.
Did I mention those countries all have lower youth delinquency rates than the US to
And they have way lower delinquency rates than the US. Don't try to construct a causality. There simply is none.
Amateurs... (Score:4, Interesting)
In the old days, restaurant owners who wanted to cheat kept two sets of books.
Anybody who is halfway decent at book cooking knows you keep three sets of books, not two.
Book 1: Shows you are loosing money, so you don't pay taxes.
Book 2: Shows you are making a lot of money, so the bank will give you a loan, or investors will invest in your company.
Book 3: Shows how much money you are really making.